There is no legal way for Web3 prediction markets to operate in Ukraine under current laws, according to a senior official involved in shaping the country’s digital economy policy.
In comments shared with CoinDesk days after Ukraine blocked access to Polymarket and nearly 200 gambling-related websites, Dmitry Nikolaievskyi, chief legal officer at the Project Office for Development of Ukraine’s Digital Economy in the Ministry of Digital Transformation, revealed a deadlock for Web3 prediction markets in the country.
Nikolaievskyi said that while the decision to ban Polymarket followed existing legal procedures, the underlying problem is that the country’s legal framework does not recognize prediction markets at all.
“Ukrainian legislation does not contain such a concept as ‘prediction markets,'” Nikolaievskyi said. He added that a long-overdue law “on virtual assets” is needed to allow businesses, not just individuals, to operate legally using crypto.
Until that law is passed, platforms that use cryptocurrency to facilitate betting on event outcomes, including Polymarket, are effectively unlicensed gaming operators in the eyes of the state.
“This really means there is currently no legal way for Web3 prediction markets to operate in Ukraine until the legislation changes,” he said.
Polymarket, which lets users bet on the outcome of events ranging from elections to geopolitical events, is currently restricted in more than 30 countries. Portugal is the latest in a growing list of countries cracking down on it.
Earlier, Ukraine’s National Commission for State Regulation of Electronic Communications (NKEK) issued a directive requiring ISPs to block access to the prediction market.
‘War-related’ betting
The order followed a recommendation by PlayCity, Ukraine’s state gaming authority, which cited Polymarket’s lack of a gaming license and the nature of its markets, which include bets linked to the war between Russia and Ukraine.
While Nikolaievskyi insisted the ban was based on existing legal grounds and carried out through appropriate channels, he acknowledged that war-related markets may have prompted regulators to act more quickly.
“We cannot rule out the fact that the presence of ‘war-related’ bets on the platform may have accelerated the decision to block it and draw the regulator’s attention to it,” he said.
Local media AIN previously reported that more than $270 million in war-related bets had been placed on Polymarket, including markets predicting the conquest of territories.
The situation leaves other prediction markets like Kalshi and PredictIt operating in a gray area.
Although they were not included in the initial list of blocked sites, Nikolaievskyi noted that PlayCity allows anyone to file formal complaints against platforms suspected of violating gaming laws.
That means a single citizen report could prompt similar enforcement actions against other prediction markets, even if they’ve stayed under the radar so far.
There may still be a way
Still, the ban appears to be aimed squarely at the platforms, not the users.
According to Nikolaievskyi, there is currently no legal effort underway to pursue individuals who interact with platforms like Polymarket using virtual private networks (VPNs) or by interacting directly with smart contracts.
“I’m not aware of any attempt by the state to ban its own citizens from interacting with decentralized protocols,” he said, nor have he seen examples of users being held accountable for bypassing the blocks.
The law change is unlikely to come soon. Nikolaievskyi said that any revision of Ukraine’s definition of gambling would have to be passed by parliament and that “the probability of its revision is extremely low”, especially in wartime.
